Mep-Ideal Toll Consortium vs Mcd & Ors
2011 Latest Caselaw 2298 Del

       THE HIGH COURT OF DELHI AT NEW DELHI

%                                           Judgment delivered on: 29.04.2011

+      W.P.(C) No.2603/2011


MEP-IDEAL TOLL CONSORTIUM                                  ..... Petitioner

                       versus

MCD & ORS.                                                 ..... Respondents

Advocates who appeared in this case:-

For the Petitioner : Dr Abhishek M. Singhvi, Sr Adv., Mr Neeraj K. Kaul, Sr Adv., Mr Sandeep Sethi, Sr Adv. with Mr Rudreshwar Singh, Mr Deepak Chitnis, Ms Nidhiram Ram and Mr Mohit Choudhry

For the Respondents : Mr Rajiv Nayar, Sr Adv., Mr Sudhir Nandrajog, Sr Adv with Mr Gaurang Kanth and Mr Rahul Kumar, Advs. for respondent/MCD

CORAM:-

HON'BLE MR. JUSTICE BADAR DURREZ AHMED HON'BLE MS. JUSTICE VEENA BIRBAL

1. Whether reporters of local papers may be allowed to see the judgment? yes

2. To be referred to the Reporter or not? yes

3. Whether the judgment should be reported in the Digest? yes

BADAR DURREZ AHMED, J (ORAL)

1. By way of this writ petition, the petitioner has sought a writ of Certiorari

or any other writ, order or direction calling for the records of the instant tender

matter from the respondents and for setting aside the decision of the respondent

no. 1 conveyed to the petitioner by a letter dated 23.04.2011 whereby the

Technical Evaluation Committee of the respondent no. 1 has declared the

petitioner no. 1 consortium as having failed in the technical evaluation. A writ

of Mandamus has also been sought directing the respondents to consider the

Financial Bid submitted by the petitioner in relation to the Request For

Proposal Document dated 01.03.2001 calling for bids for „Engagement of the

Contractor‟ by the MCD for Toll Collection at border points from specified

commercial vehicles entering Delhi.

2. The impugned letter dated 23.04.2011 reads as under:-

"MUNICIPAL CORPORATION OF DELHI TOLL TAX DEPARTMENT th 14 Floor, „E‟ Block, Dr. S.P.M. Civic Centre, New Delhi-

110002 (Tel:011-23226422)

No: AC(TT)/HQ/2011/41 Dated : 23.4.2011

To

M/s MEP-IDEAL TOLL CONSORTIUM 410, Boomerang, Near Chandivli Studio, Chandivli Farm Road, Andheri (East), MUMBAI- 400 072.

(Emai : [email protected])

Sub: ENGAGEMENT OF A CONTRACTOR BY MCD FOR TOLL COLLECTION AT BORDER POINTS FROM SPECIFIED COMMERCIAL VEHICLES ENTERING DELHI.

Sir, The Technical Evaluation Committee after examining the Technical Bid submitted by your consortium declares you as "FAIL".

The reason for your disqualification briefly is due to the applicability of Clause 1.5(a) and 1.5(d) of Section -2-B, (page-21) of Volume-I of RFP document, which pertains to

the „Conflict of Interest‟ and opinion of the Solicitor General of India on the subject.

Yours faithfully,

( Vinay Kumar ) Asstt. Commissioner (Toll Tax)"

3. It is apparent that the reason for disqualification has been briefly stated

to be due to the applicability of Clauses 1.5(a) and 1.5(b) of Section 2-B of

Volume-I of the RFP document which pertains to „Conflict of Interest‟. Of

course, another reason for disqualification has also been mentioned and that is

the opinion of the Solicitor General on the subject.

4. The relevant portion of clause 1.5 of Section 2-B of Volume-I of the

RFP Document reads as under:-

"1.5 Any Applicant/Bidder shall not have a conflict of interest (the "Conflict of Interest") that affects the bidding process. Any Applicant/Bidder found to have a Conflict of Interest shall be disqualified. An Applicant shall be deemed to have a Conflict of Interest affecting the bidding process, if:

(a) the Applicant/Bidder, its member or associate (or any constituent thereof) and any other Applicant, its Member or any Associate thereof (or any constituent thereof) have common controlling shareholders or other ownership interest; provided that this disqualification shall not apply in cases where the direct or indirect shareholding of an Applicant, its Member or an Associate thereof (or any shareholder thereof having a shareholding of more than 5 per cent of the paid up and subscribed share capital of such Applicant, Member or Associate, as the case may be) in the other Applicant, its Member or Associate is less than 5 per cent of the subscribed and paid up equity share capital thereof; provided further that this disqualification shall not apply to any ownership by a bank, insurance company, pension fund or a public financial institution referred to in section 4A of the Companies Act, 1956.

        (b)    XXXX          XXXX          XXXX          XXXX

       (c)    XXXX          XXXX          XXXX          XXXX

       (d)    such Applicant, or any Associate thereof has a

relationship with another Applicant/Bidder, or any Associate thereof, directly or through common third party/parties, that puts either or both of them in a position to have access to each others‟ information about, or to influence the bidding of either or each other; or

(e) XXXX XXXX XXXX XXXX"

5. Initially, the learned counsel for the petitioner had pointed out that the

disqualification was on the ground that one Mr Dattatray P. Mhaiskar owned

shares in the companies constituting two consortiums who have applied

separately. The two consortiums involved in the present petition are -

(1) MEP-Ideal Toll Consortium which is comprised of (a) MEP Toll Road Pvt

Ltd and (b) Ideal Toll and Infrastructure Pvt Ltd; and (2) IRB-MIPL

Consortium which, in turn, is comprised of (a) IRB Infrastructure Developers

Ltd and (b) Mhaiskar Infrastructure Pvt Ltd. The initial objection and

disqualification was with regard to the allegation that the said Mr Dattatray P.

Mhaiskar had shares in each of the four constituent companies of the two

consortiums and that insofar as IRB Infrastructure Developers Ltd is

concerned, he had a shareholding of 7.63 per cent which was in excess of the 5

per cent limit prescribed in Clause 1.5(a). However, this argument has been

given up by the respondents inasmuch as a plain reading of Clause 1.5(a) would

show that the disqualification qua Mr Dattatray P. Mhaiskar could only apply if

he held more than 5 per cent shares in a constituent of both the consortiums and

not just in one of the consortiums.

6. The other ground for disqualification under Clause 1.5(a), according to

the learned counsel for the respondent-MCD is that Ideal Toll and

Infrastructure Pvt Ltd which is a constituent of MEP-Ideal Toll Consortium

itself holds 7.63 per cent of the shares of IRB Infrastructure Developers Ltd

which is a constituent of IRB-MIPL Consortium and this, in itself, disqualifies

the petitioner consortium (MEP-Ideal Toll Consortium) on the ground of

„Conflict of Interest‟ as contemplated under Clause 1.5(a) which has been set

out above.

7. The learned counsel on behalf of the petitioner submitted that unless and

until there was a countervailing ownership interest of a constituent of the other

consortium in the petitioner consortium in excess of 5 per cent, the deeming

provision of „Conflict of Interest‟ would not get triggered.

8. We have heard the counsel for the parties on this aspect of the matter and

upon a plain reading of Clause 1.5(a) we feel that the only interpretation that

can be given to it is that when an applicant or its constituent, itself, has an

ownership interest in another applicant or its constituent and that ownership

interest is in excess of 5 per cent of the subscribed and paid up equity share

capital then it shall be deemed to have a „Conflict of Interest‟. Admittedly,

Ideal Toll and Infrastructure Pvt Ltd which is a constituent of MEP-Ideal Toll

Consortium has an ownership interest of 7.63% in IRB Infrastructure

Developers Ltd which is a constituent of the other consortium - IRB-MIPL

Consortium. Hence, the deemed conflict of interest is triggered. It is with

regard to this aspect of the matter that the MCD has ultimately disqualified the

petitioner consortium on the basis of „Conflict of Interest‟.

9. Insofar as the plea of the disqualification under Clause 1.5(d) is

concerned, we find that at this stage it would be very difficult to come to a

concrete conclusion as to whether the „Conflict of Interest‟ as stipulated therein

is made out or not because there is no material before us to ascertain as to

whether constituents of the consortiums had access to each others‟ information

or were in a position to influence the bidding of each other. Therefore, we are

not in agreement, prima facie, with the submissions made by the learned

counsel for the MCD on the applicability of Clause 1.5(d) of Section 2-B of the

RFP Document. However, on the basis of the view taken by us in respect of

Clause 1.5(a) we feel that the fact that Ideal Toll and Infrastructure Pvt Ltd

holds 7.63 per cent shares of IRB Infrastructure Developers Ltd and thereby

holds shares in excess of the 5 per cent shares stipulated in Clause 1.5(a), is

sufficient ground for disqualification of the petitioner consortium.

10. We may also point out that an identical provision (except that the

stipulation with regard to shareholding was 1% and not 5% as in the present

case) was considered in the case of Navinya Buildcon Private Limited v.

Union of India & Others, W.P.(C) No. 7181/2009, decided on 08.04.2009, by

a Division Bench of this court and a similar view was taken.

11. In view of the foregoing, the writ petition is dismissed and the interim

order stands vacated. Dasti.

BADAR DURREZ AHMED, J

VEENA BIRBAL, J APRIL 29, 2011/kks